THOROUGHBRED HORSEMEN’S
GROUP, LLC
PURPOSE OF COMPANY
The Thoroughbred racing industry is changing. Thoroughbred racetracks are consolidating under common ownership as in the case of Magna, Churchill, Penn National, MTR Gaming and Harrah’s and most racetracks are now owned by publicly held corporations whose strategic interests may extend far beyond the business of horseracing. Moreover, Thoroughbred horse racing’s wagering network-the principal source of horsemen’s purse revenue-continues to evolve rapidly beyond horsemen’s traditional spheres of influence.
Where is the good news for the Horsemen? For the first time, a nationally recognized antitrust law firm has advised us that horsemen can legally collaborate when dealing with these companies: forming a separate legal entity for this purpose limits our antitrust exposure to an acceptable level.
The Company will be operated on a break-even basis and funded only to the extent to cover accounting, legal, managerial costs and possibly some of the costs of Member meeting expenses. Funding will initially come from Member contributions but will be changed to a small percentage of purse revenue generated pursuant to the agreements it negotiates as soon as such agreements are finalized.
What would the Company do for its Members?
¨ Negotiate - within parameters set by its Members - with the multi-jurisdictional racetrack companies regarding contractual terms and purse revenue with respect to both imported and exported simulcast races.
¨ Secure export authorization from its Members and relay to appropriate party on agreed export terms and conditions.
¨ Act as a clearinghouse for the collection and redistribution of certain funds, such as Source Market Fees from Advance Deposit Wagering companies, as directed by its Members.
¨ Serve as a liaison between its Members and other entities to achieve transparency of handle and distribution of takeout.
¨ Act as a resource for its Members performing due diligence on all export sites requesting permission to wager on Members’ races.
Our main goal is to be less dependent on racetracks to negotiate, collect and distribute our simulcast purse revenue. By collectively hiring and directing professional management, that no single association could likely afford or justify, horsemen and their associations can achieve greater influence and self-sufficiency in simulcasting matters.
Under the prevailing simulcast model, host tracks and betting agencies negotiate “host fees” paid by the betting agencies to the host tracks (which then share those host fees with their purse accounts). In certain cases advance deposit wagering companies pay “source market fees” to tracks in the area where the bettor resides in addition to the fees paid to the host track. These “source market fees” are also shared with the purse account at the track near where the person making the bet resides. Our Company will change this track-oriented model, in which host track/betting agency negotiations have failed to produce increased purse revenue from increased simulcast wagering, to a model that more effectively ties growth in simulcast wagering to purse revenue growth.
Now more than ever we need to be prepared to protect our own interest, since our goals may not be exactly parallel with those of racetrack ownership. Often we are competing with the racetrack corporations for a portion of the takeout, and it is prudent to be prepared to protect our own interests. This Company will move us in that direction.
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